Contract Interpretation Regimes

Abstract

Freedom of contract requires the integrity of social institutions that ensure the preconditions for private autonomy. This has been largely ignored by a private law doctrine that works on the assumption of the state being the supplier of background justice. The article argues for an institutional turn in contract interpretation. Depending on whether contracts can link up to existing conventions or have to create their institutional context in the first place, courts may apply either an ‘institution‐preserving interpretation’ or an ‘institution‐creating interpretation’. This implies the need to refrain from following universal rules of contractual interpretation. Rather, legal doctrine should focus on the development of sector‐specific standards of interpretation and on support for private legal regimes that ensure socially reflexive constructions of contracts.